Market Update – Citigroup, Inc (NYSE:C), Bank of America Corporation (NYSE:BAC), BP plc (NYSE:BP)
The month of August was a lackluster one for the major US indexes. Overall, the Dow Jones Industrial Average lost 4.3%, the Nasdaq lost 6.2%, and the S&P 500 slipped 4.7%. This makes the recent August one of the worst months of Augusts for the market in nearly a decade. To add to the pessimism, today payroll company Automatic Data Processing (ADP) reported that August shed 10,000 net jobs, despite hopes by Economists that the month would see a net gain. July saw a net gain of 37,000 jobs, and experts were predicting August would add another 13,000 to 17,000.
The FDIC recently released their report on the banking industries second quarter results, and the common stock prices of megabanks like Citigroup, Inc (NYSE:C) and Bank of America Corporation (NYSE:BAC) have popped up accordingly. In the FDIC’s quarterly report, they focused on the improved Q2 provisions for loan loss reserves of $40.3 billion, which are the lowest since Q1 2008. Further, the FDIC has focused on overall improved credit quality in the industry. Accordingly, Citi share prices are up 2.05% at the time of writing, and BofA share prices are up 3.45%.
Continuing the above mentioned trend, with the previously poor August behind investors, overall September has started with a bang. While historically a poor month for the market, the early trading has seen all three major US indexes up significantly to start the day. At the time of writing, the DJIA is up 230.61 (a 2.30% gain), the Nasdaq is up 51.22 (a 2.46% gain) and the S&P 500 is up 25.65 (a 2.46% gain). One theory as to why the market is off to such a hot start for the month has to do with the job data; though counter-intuitive that the market would rise when jobless data is bleak, investors may have already figured in poor data for the month and are now acting on the perceived value of stocks. Also, the recent release of minutes from the Fed has helped boost investor confidence in the strength of the economic recovery. The aforementioned FDIC’s confident assessment of the finance industry can only help as well.
Finally for the day, the clean-up effort in the Gulf is continuing to make headway. The oil giant responsible for the Deepwater Horizon oil spill, BP plc (NYSE:BP), is continuing its liquidation of assets to raise capital for the $20 billion compensation fund set aside for businesses and workers hurt by the spill. The London-based oil company has recently announced a sale of its Malaysian-based polyethylene and ethylene unit for a reported $363 million, according to TheStreet. BP is up 2.45% to start the month.
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